Paxos Identifies Key Opportunities During Crypto Winter

Blockchain infrastructure provider Paxos has published a report aimed at helping the cryptocurrency community navigate the current market conditions during the crypto winter. The Paxos Crypto Winter Report 2023 identifies several key opportunities for crypto projects, including seeking solutions and partnerships.

According to the report, those who view the crypto winter as a “season for bridge-building” will come out ahead of the others. This means partnering with businesses that implement technologies that aim to meet the “real-world needs of the financial sector.” By doing so, projects can position themselves for success once the market recovers.

The report also emphasizes the usefulness of stablecoins, one of the crypto use cases that have “consistently proven itself over time.” Clara Medalie, the director of research at the digital asset data provider Kaiko, explains that stablecoins have been very useful for the entire industry. However, there is still room for improvement in terms of transparency over the reserves of these stablecoins.

Medalie believes that greater transparency is coming: “We need more transparency over the reserves of these stablecoins, which I think we’re going to see.” This will help to ensure that stablecoins remain a viable option for the industry moving forward.

While stablecoins may be an important tool for the industry, there are differing opinions on their regulation. The CEO and executive director of the Stellar Development Foundation, Denelle Dixon, believes that regulating stablecoins may be necessary to maintain a strong dollar globally. Dixon argues that a USD stablecoin is the “way to see that happen.”

On the other hand, the Bank of International Settlements (BIS) recently published a working paper that deems stablecoins a less preferable form of tokenized money. The report likens stablecoins to bearer instruments that were prevalent during the era of “free banking” in the United States. While the BIS recognizes the potential benefits of stablecoins, it ultimately concludes that they pose significant risks to financial stability.

Despite differing opinions on stablecoins, the Paxos Crypto Winter Report 2023 emphasizes the importance of seeking solutions and partnerships during the current market conditions. By doing so, projects can position themselves for success once the market recovers.

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Crypto Hedge Fund Protocol Ventures to Shut Down Amid Market Fraught

Protocol Ventures LP, a major US crypto hedge fund, has announced plans to close down its business and return cash to investors following the plunge in the market for digital assets. That is according to people familiar with sources, who asked for their identities to remain anonymous.

Protocol Ventures sent notices to investors at the end of October about the move, the sources revealed. One of the people said that the hedge fund is expecting to complete the closure by year-end or the first quarter of 2023.

Investors in Protocol’s fund of hedge funds may have lost as much as 90% over the past year, as per the sources.

Protocol Ventures is a fund of crypto hedge fund that invested in companies such as BlockTower Capital, Multicoin Capital, Pantera, and Electric Capital, among others. Protocol’s decision to wind down its business comes amid broad turbulence in the digital asset sector, which has lost a $2 trillion market value over six months.

In 2021, crypto hedge funds gained widespread popularity as the pandemic severely impacted the financial markets. As a result, the economic crisis triggered investors to embrace cryptocurrency as safe-haven assets.

However, outperformance rapidly dissipated after central banks globally hiked interest rates to fight inflation since the beginning of this year. The aggressive shift dramatically tightened financial conditions and reduced the appetite for riskier investments.

As a result, a major cryptocurrency hedge fund based in Singapore, called Three Arrows Capital (3AC), fell into liquidation in June this year due to the ongoing crypto winter that started harshly in May. The plunge in cryptocurrency prices, which wiped off billions of dollars in the market, significantly hurt 3AC and exposed a liquidity crisis at the firm.

With a net asset value of $18 billion in its last public statement, 3AC was known for directly taking large, highly leveraged stakes in crypto businesses and cryptocurrencies. But the turmoil in the crypto markets wiped out the value of those holdings.

In June, Mike Novogratz, the founder and CEO of Galaxy Digital, anticipated that two-thirds of the hedge funds that invest in crypto would fail due to the ongoing market turbulence.

Novogratz cited the wider financial market’s reaction to the removal of stimulus by the US central bank as the reason for the crash of the cryptocurrency prices. The executive said the collapse of the TerraUSD stablecoin, in which he and Galaxy were investors, was triggered by broader macroeconomic factors rather than flaws in the project.

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BingX Is Expanding Global Workforce Despite Crypto Winter

BingX, a major social trading exchange based in Singapore, announced on Friday that it is actively hiring for roles across its global offices despite the current market downturn.

Established in 2018, BingX is a crypto copy trading exchange that offers spot, derivatives, and copy trading services to more than 100 nations worldwide.

The exchange is looking to fill more than 200 positions globally. Among some of the positions open are PR managers, product development, customer service and affiliates in Germany, South Korea, Turkey, Japan, Vietnam, Russia, and Spain.

Since the beginning of the second quarter this year, the crypto market has been on a downward trend, which has led several companies to either freeze hiring or enforce headcount reductions.

The overall market sentiments have not deterred BingX from enhancing its offerings and ensuring the ever-changing needs of its users are fulfilled.

Elvisco Carrington, BingX PR and Communications Director, commented: “BingX will accelerate its growth, even amidst such challenging times. We have always hired carefully and will continue to do so. This so-called crypto winter presents a rare chance for us to tap on some of the industry’s best talents and we will leverage on that.”

Different Responses to Bear Market 

The previous few years have been a boom period for the crypto sector, with a market-wide rise in prices driving an expansion in the industry.

That is not the case currently as the bearish conditions started being witnessed in April 2022 and have unsurprisingly put the brakes on such growth.

Many major crypto-related companies announced layoffs, including Coinbase, Crypto.com, and BlockFi, among others, while the industry recorded a loss of 1,700 jobs in June alone.

Despite mass layoffs by major market participants, there are firms that are accelerating their hiring process.

In June, Binance announced its plans to hire more than 2,000 people across Europe, Asia, South America, and the Middle East.

Other firm companies such as Kraken, ConsenSys, Polygon, Chainlink Labs, Aave, and Uniswap Labs recently posted hundreds of job opportunities amid crashing crypto markets.

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Coinbase Falls Short in the S & P Global Ratings as Crypto Winter Stiffens

Financial analytics firm S&P Global Ratings has disclosed that Coinbase has been ranked lower for the reduction in its overall earnings in Q2 this year.

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According to the statement issued by the rating agency, the US-based crypto exchange dropped from ‘BB+’ to ‘BB’, suggesting difficult times for the company.

Several reasons account for the current rating of Coinbase by S&P Global Ratings.

First is the prolonged crypto winter that has hit the cryptocurrency ecosystem for about three months now. The extended negative event has affected the earnings of Coinbase remarkably, making it difficult for the crypto firm to comfortably provide for its operational costs.

Secondly, as the statement suggests, the close competition amongst crypto exchanges has intensified greatly in recent times, putting Coinbase in a tight spot. In comparison to the first quarter, the overall trading volume of Coinbase reduced by 30% in Q2. Also, the crypto firm’s “total crypto spot trading volume across all venues declined only 3%.” This notably resulted in a reduction in market share for the company.

Added to this, in relation to the first quarter, the overall assets on the Coinbase platform reduced by 63% to $96 billion. This is because the prices of cryptocurrency assets on the crypto firm’s platform became weaker, owing to the overall fall of crypto assets.

Furthermore, the crypto firm is facing some regulatory challenges. The SEC is currently investigating a possible claim that Coinbase is listing securities as crypto assets on its platform. A former employee of the crypto firm is indicted in this claim.

As the prices of crypto assets have greatly lopsided, the net losses of Coinbase has remarkably increased to “$1.1 billion in the second quarter of 2022 from $430 million in the first quarter, reflecting lower trading volumes”.

The S&P Global Ratings, known for similar ratings, notes that it could still lower its rating in the coming months for Coinbase if it sustains its weak earnings, doesn’t improve on its reduced market share and if increased regulations continue to impact the business negatively.

However, if situations improve for Coinbase, it could score higher ratings by S&P Global in the future.

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Three Crucial Expectations from the Crypto Market in August

The digital currency ecosystem seems to be carving out a resistant path for itself recently, with the combined crypto market capitalization staying consecutively above the $1 trillion benchmark

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The market is now seeing impressive price recoveries across the board, with Bitcoin (BTC) surging past the $23,000 resistance point and Ethereum (ETH) charting a 30-day high of $1,774.58. Overall, the market is showing signs that the crypto winter may be wrapping up, but while investors may want to start bagging new coins in their portfolios, these three key expectations should stay at the top of their minds for August.

1. The Global Economy is not Out of the Woods Yet

One of the key reasons why the crypto ecosystem was nosedived was the inconsistency in the global economy. While the economy is still recovering from the onslaught of the coronavirus pandemic, Russia’s invasion of Ukraine also contributed immensely to the strain on the global supply chain.

This economic instability has plunged many nations into recession, including the United States, which has been grappling with soaring inflation over the past 2 quarters. With Q2 GDP also dipping low, and rising interest rates, the negative outlook of the US economy alongside other developed nations might continue to weigh in on the stock market, and by extension, on the crypto ecosystem.

2. Institutional Investors’ Focus Can’t Fuel Massive Rally

The flow of institutional money into the digital currency ecosystem in 2021 accounted for one of the reasons why the industry experienced such massive growth that pushed Bitcoin to an All-Time High (ATH) above $69,000 at the time.

While corporate money is still flowing into the digital currency ecosystem, it is important to note that the focus is different this time. Investors are bootstrapping projects with the right fundamentals and infrastructure that can support the future Web3.0 everyone has been clamouring for.

As such, investors’ money will be visible in August, but investment decisions should not be made with the hope of these funds charting quantum leaps

3, Crypto Volatility May Be More Resounding

The macroeconomic climate will also stir a massive price fluctuation across the board in August. While this is bound to be an all-encompassing trend, Ethereum investors will need to be more watchful as the fast-approaching The Merge that will usher in Ethereum 2.0 will likely fuel massive price volatility as positions will be opened and closed on a more consistent basis.

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CoinFLEX Cuts Down on Staff Strength Amid Stability Woes

Updating its users on the latest for the week, cryptocurrency exchange CoinFLEX has announced that it is cutting down on its staff strength.

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The retrenchment process will run across its various departments and geographic locations. This is all in a bid to reduce its running cost and focus its funds on its core business after the distribution of the CoinFLEX Composites.

The CoinFLEX Composite is inclusive of rvUSD, equity, and FLEX Coin. The exchange has been working on these CoinFLEX Composites for a while now. The process involved several lawyers and a significant creditor’s group putting up strategies for their distributions. The plans are yet to be perfected but will be in the near term. 

After the distribution of these Composites, it is suspected that the business might not run smoothly for a lack of funds. Therefore, the need to become a leaner business staffing-wise. It’s quite unfortunate but necessary for the exchange to let go of a significant number of its employees. Estimated, the cut will reduce CoinFLEX’s cost base by almost 50-60%.

Key members of CoinFLEX’s staff will be retained on its team. The remaining staff will focus their research and outputs on products and technology. The firm will fix structures in place to monitor its cost and scaling process to ensure efficiency. CoinFLEX wishes to be prepared with the right workforce and economy size, in readiness for an acquisition or partnership with any entity.

The updated details of the CoinFLEX Composite distribution will be published next week. So far, its delay is associated with significant legal and accounting procedures which need to be completed. 

CoinFLEX Introduces New Token

In the thickness of the crypto winter, CoinFLEX had to halt withdrawals on its platform. Although there were suspicions that it was not only due to the extreme market conditions but also from issues involving a counterparty. Soon after, the withdrawal suspension, CoinFLEX revealed its plan to raise funds by issuing a new token

The new token “Recovery Value USD” (rvUSD) which is one of the CoinFLEX Composite offers a 20% annual percentage rate (APR). Ultimately, this is a strategy to offset the $47 million debt owed by a high-profile investor known as Bitcoin (BTC) Jesus.

CoinFLEX plans to keep working to remain afloat in the current crypto economy.

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Crypto Winter Is Thawing With Bitcoin And Ethereum Rebound Signal

It’s been a rough few weeks for cryptocurrencies, but things are finally looking up! Cryptocurrencies that have fallen off their highs over the past three weeks appear to be on an upward trajectory again.

Crypto winter is thawing as crypto markets are showing some signs of life. For example, Bitcoin, which fell 52% from its November highs to a low of around $33,000, has gained 15% in the past seven days, and Ethereum, which dropped 55% from its all-time high, has rebounded 13%.

Related Reading | Bitcoin and Ethereum rebound signals ‘crypto winter’ thaw

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January was a tough month for crypto investors. Still, Bank of America’s global strategist Alkesh Shah says he saw increased interest from people who want to invest or trade cryptocurrencies. He expects prices will rise throughout 2022 and into 2023 as more regulatory clarity emerges about digital assets like Bitcoin.

Bitcoin Price
Bitcoin price is steady at around $44,000. Source: BTC/USD on Tradingview.com

When it comes to risky assets, like equities and real estate Shah says that their prices can fluctuate wildly. But with crypto, there is one additional factor: the Federal Reserve’s announcement about possible rate rises in March could affect its value too.

According to Shah statement;

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The market as a whole, and risk assets broadly, really weren’t expecting how many rate hikes are now being talked about.

Experts Predictions On Rate Hikes In 2022

The economy grows with each passing year, and inflation trends remain stable. This has led some experts to predict even more rate hikes in 2022. For example, Goldman Sachs’ forecast of four per season during the year 2022; however, one prediction stands out: Shah’s own bank forecasts seven increases in 2022. 

Related Reading | Seven hikes? Fast-rising wages could cause the Fed to raise interest rates even higher this year

The current decline in crypto prices is likely to continue for the next three months, but after that, it’s unlikely unless there are some significant changes. 

A recent study done by Shah suggests banks may hike interest rates which would cause even more problems with traders who rely on volatile assets like cryptocurrencies as their sole investment vehicle.

Crypto markets are adjusting to a new reality where risks no longer reap rewards. According to Shah, prices will again start climbing once the market will adjust to the new reality.

During the interview, Shah added:

Then, this group especially (crypto assets), can start to move up more based on the fundamentals of growth and adoption and all of the new applications being built on this ecosystem.

With recent developments in the blockchain space, more investors are beginning to take notice of Ethereum and its various applications. There’s not only one Ether but three different ones worth noting: Binance Coin (BNB) Avalanche (AVA). Each has its unique function that entrepreneurs can use to build on top of these networks or anyone looking into what they do – from security purposes all way down to simplicity.

Additionally, Shah said:

Investors just can’t ignore the sector anymore; It’s gotten too big to ignore.

                   Featured image from Pixabay, chart from Tradingview.com

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Avalanche correction risk rises after AVAX price soars 80% from January lows

Avalanche (AVAX) recovery extended into its third week, primarily in the wake of similar upside retracement across the top crypto assets.

On Thursday, AVAX’s price rallied by nearly 16% to reach $96.50, its best level since Jan. 14, 2022. The massive intraday move came as a part of a recovery that started Jan. 22, after the Avalanche token bottomed out near $53. As a result, AVAX’s net rebound came out to be more than 80%.

AVAX/USD daily price chart. Source: TradingView

Network growth offsets macroeconomic scare

Crypto markets have been whipsawed since the beginning of 2022 as investors assessed the U.S. Federal Reserve’s monetary tightening prospects. After reaching its record high above $150 in November 2021, AVAX lost as much as 65% of its value in what many have termed as “crypto winter.”

Similarly, top cryptocurrencies Bitcoin (BTC) and Ether (ETH) plunged by as much as 52% and 57% from their Nov. 2021 record highs. But they recovered almost half of their losses after bottoming out in late Jan. 2022, thus prompting other crypto assets — including AVAX — to undergo similar healing rallies.

AVAX price also rose as Avalanche—as a standalone blockchain project—reported massive network growth at 2021’s close.

That included a rise in the number of its daily active addresses to 70,000 per day in Q4 versus 10,000 per day in Q3 and a 714% rise in the total value locked (TVL), the fastest growth among its competitors within the Layer-1 and Layer-2 categories, after the arrival of leading Ethereum protocols, Aave and Curve, into its ecosystem.

Avalanche 2021 total value locked versus competitors. Source: TradingView

Interestingly, the Avalanche network grew in Q4 despite a drop in its net market valuation in the same period, suggesting AVAX merely reacted to turbulence in the crypto and, in turn, the global markets, led by the Fed’s so-called taper tantrums. 

But a report co-authored by Messari researchers Chase Devens and James Trautman hinted at higher AVAX adoption in the quarterly sessions ahead. It mentioned Avalanche Rush, a $180 million liquidity mining incentive program launched in August 2021, for its ability to attract more participants into the network.

Excerpts from the report:

“While Avalanche Rush may continue to serve as a catalyst for ecosystem growth and garner more project launches and partnerships, significant technological advancements are on the horizon for the teams developing the Avalanche core platform and are critical to the network’s ability to sustain further growth.”

AVAX technical outlook

AVAX’s recent upside move met with selloff near a multi-month descending trendline resistance this Tuesday.

Specifically, the resistance comes as a part of a falling channel. AVAX has been trending lower inside it since the beginning of its massive correction move in late November 2021. As a result, the Avalanche token’s probability of continuing downward inside the channel’s range—for now—appears higher.

AVAX/USD daily price chart featuring falling channel. Source: TradingView

An extended pullback upon testing the channel’s upper trendline as resistance may push AVAX toward the interim support level of $86.50. A further breakdown would have AVAX/USD eyeing $72 as its next target.

Related: VanEck launches its first multi-token cryptocurrency fund

Nevertheless, on the whole, AVAX’s bearish target on a pullback looks to be near the channel’s lower trendline —that is around $57.

Conversely, a decisive move above the channel’s upper trendline could have AVAX eye $104 as its next upside target, with an inclination to hit $135 on a further move upward. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.